Carnarvon Energy Limited (Carnarvon or the Company) provides an update on the
Company’s activities and financial position as at 31 March 2025.
Quarter Highlights
- Robust Balance Sheet maintained with A$186 million cash, no debt, and US$90 million
Dorado development free carry
- Capital management initiatives commenced, including an On-Market Buyback for up to
10% of the Company’s issued capital,
- In addition, the Company has commenced a process to enable the potential return of
up to $0.07 per share (A$125 million) to shareholders.
Carnarvon’s CEO, Philip Huizenga, commented:
“It was disappointing to announce at the beginning of the quarter the decision not to acquire
the identified FPSO and delay commencement of FEED on the Dorado project.
I am aware that we still need to provide our shareholders with a revised timeline for the Dorado
development. We are working with the Joint Venture partners on this and investigating
alternative options to accelerate the project. Dorado, which has been recognised as the third
largest oilfield in the greater North-West Shelf, is just too big and valuable to remain
undeveloped for an extended period of time.
We’re also continuing to work on several options to realise value for shareholders, including our
process on a potential corporate or asset transaction and a long-awaited return to drilling. The
Company will consider all opportunities that provide value and certainty to Carnarvon shareholders.
With the delay to the Dorado development, the Carnarvon Board recognises that the current
funds earmarked for the execution phase may be idle in the upcoming period, which leads to
the potential for a capital return later this year. We have commenced the process of a class
ruling from the Australian Taxation Office (ATO) to confirm that any capital returns are not
treated as a dividend for taxation purposes.
A decision on the capital return, and the exact quantum, is expected once that ruling has been
received, which is expected to take around six months. Unless a superior, value accretive
alternative is presented by that time, the Board will seek shareholder approval for a capital
return.
Even with a capital return to shareholders, Carnarvon will remain well-funded for our near-term
plans of the exploration of up to three wells in the Bedout Sub-basin and to take the Dorado
project into a final investment decision. Future Dorado development costs can be funded by a
combination of the existing US$90m capital cost carry and debt.
Although not recognised in our current share price, the Bedout Sub-basin, offshore Western
Australia, has incredible latent value headlined by the approximately 200 million barrels (2C,
gross)
1
of high-quality hydrocarbons in both Dorado and Pavo, and outstanding exploration
upside.
We are also working hard on getting back to exploration drilling. At least one well is planned
for next year in the Bedout Sub-basin and preparation work on this is well underway. With a
significant number of prospects and leads mapped using modern 3D seismic data, and an
incredible success rate of close to 70% for exploration wells, we look forward to outlining more
detailed plans in the near-term.”
Project Development
Dorado WA-64-L (Carnarvon 10%, Santos 80%, operator)
The Dorado oil and gas field sits 150km off the coast of Western Australia, in approximately 90
metres water depth. The largest undeveloped oil field in Australia, plans were advanced for
Dorado to be developed via a staged development, with an initial liquids extraction (Phase 1)
followed by gas export (Phase 2). The Phase 1 liquids development concept, which was
optimised in 2024, was centred around a single well-head platform (WHP), supporting up to 12
wells being tied back to a Floating Production Storage and Offloading (FPSO) vessel.
During the quarter, the Operator decided not to proceed with the acquisition of an identified
FPSO vessel and deferred the commencement of Front-End Engineering and Design (FEED)
studies that had been anticipated for this year2
.
The Company is working with the Joint Venture partners to update the timeline for the Dorado
development and is investigating alternative options to accelerate the project. Despite the
delays to the Dorado development, the Joint Venture recognises immense value in the
discovered resources at Dorado, Pavo and Roc, and the world class exploration prospectivity in
the surrounding Bedout Sub-basin. Carnarvon looks forward to providing an update on the
development timeline in due course.
Bedout Exploration
WA-435,6,7&8-P (Carnarvon 10-20%, Santos is the operator)
The Bedout Sub-basin, offshore Western Australia, is one of Australia’s most exciting
exploration regions. The Joint Venture’s exploration strategy could potentially unlock
substantial additional resources, with unrisked prospective resource estimates of 9 Tcf of gas
and 1.6 billion barrels of liquids (Pmean*, gross)3
.
At the start of the quarter, the regulatory authority offered the Joint Venture a renewal of the
four Exploration Permits, WA-435-P, WA-436-P, WA-437-P and WA-438-P. Per regulations, the
renewal required the relinquishment of 50% of the Permit, excluding the WA-64-L Production
License (Dorado) and defined Location Declarations (Roc and Pavo). The JV retains an area
encompassing over 11,000 km² in which 95% of the identified prospectivity has been preserved,
with 79% of the exploration permits now covered by modern, high-quality 3D seismic data.
Carnarvon is looking forward to working with the Joint Venture to return to drilling. The
Operator has stated a desire to further evaluate the Bedout Sub-basin resources through
exploration, and the JV is targeting drilling in 2026, subject to Environmental Plan approvals
and rig availability.
The Joint Venture has yet to finalise where the drilling will occur, with the proposed
Environmental Plan covering several locations across all four Permits.
The prospectivity outlined has the potential to unlock sufficient gas resources to underpin a
future gas export development project.
Corporate
The Company recognises significant value in the Bedout Basin assets, including the Dorado
and Pavo discovered oil fields. Despite the delays to FEED entry and therefore FID, Carnarvon
continues to explore alternative transactions to accelerate value realisation.
Capital Management
Considering the delays in the development of the Dorado project, the Company has reviewed
its capital management. As a result, the Company announced two initiatives during the quarter.
Firstly, the Company has put in place an On-market Buyback for up to 10% of shares. The
Company won’t always be in the market buying shares, including occasions when it’s not
permitted to, however this option remains available to the Company to actively manage its
capital when there is value for shareholders.
The Company has also commenced a process to enable a potential return of capital to
shareholders of up to $0.07 per share (A$125 million), less funds utilised for the On-market
Buyback.
The Company is seeking a Class Ruling from the ATO to confirm that the Capital Return will not
be treated as a dividend for Australian taxation purposes. A Class Ruling is expected within six
months.
Subject to any ASX waivers sought, a decision on the capital return, and the final quantum, is
expected once the class ruling has been received, and unless a superior alternative is presented
by that time, the Board will seek shareholder approval for a capital return.
Following the potential capital return, the Company expects to retain at least A$62m and
remain well-funded for its near-term plans of the exploration of up to three wells in the Bedout
and to take the Dorado project into a final investment decision. Future Dorado development
costs can be funded by a combination of the existing US$90m capital cost carry and debt.
Cash and liquidity position
The Company ended the quarter with A$186 million in cash, and no debt. Carnarvon also
maintains US$90 million in future Dorado development cost carry.
Following significant corporate cost reductions throughout 2024, the interest received during
the current quarter continued to be materially higher than administrative, corporate and staff
costs for the period.
The Company continued to prudently manage its cash balance through term deposits and by
holding a balance of funds between AUD and USD to ensure the Company maintains a natural
hedge for future expected expenditures in each currency. Following the Dorado project
deferral, the Company has substantially less requirement for USD and has converted a majority
of its funds to AUD to realise the recent foreign exchange gains.